If you have a lot of debt and are always getting calls about it then you may think that debt consolidation is a great idea. But, just like most things, eliminating debt will take time. The debt consolidation process is slow and gradual, and it requires some smart planning tools. The information contained in this article can assist you in making smart decisions about consolidating your existing debt.
View your credit report prior to consolidating debts. The first step to fix your debt is to know where it came from. See how much debt you have and whom money is owed to. Without this information, you may struggle to find out who you need to be paying.
Try and confirm that you’re working with qualified debt consolidation counselors. They should be properly certified. Is the company legitimate with the backing of well-known and highly reputable institutions? These are important factors when considering which debt consolidation company is the best one to help you manage your finances.
Consider the long term effects of your debt consolidation decision. You want a company that is willing to work with you later on as well as in the short-term. Some offer ongoing exercises that can keep you out of trouble down the road.
Just because a debt consolidation is non-profit does not mean it is your best option. Non-profit doesn’t mean you will get the best service. Instead, look up the company on the BBB to determine if you want to do business with them.
If you’re struggling financially, you may want to think about filing for bankruptcy. A bankruptcy, regardless of type, will leave a stain on your credit report. That said, if you can’t pay off a consolidated loan, you’ll end up with bad credit anyway. Filing for bankruptcy lets you reduce debt and financially recover.
When seeking a consolidation loan, look for low, fixed rates. Otherwise, you will constantly be worried about expensive adjustments. Look for a one-stop loan that provides favorable terms over the life of the loan and puts you in a much better financial position once the loan has been paid off.
Often, a new credit card with a low interest rate can be useful for consolidating some debts by paying them off using the new, low interest credit card. You end up with only one bill to pay each month, and the interest is much lower. Once your debts have been consolidated onto one card, you should work to pay it off before your introductory rate of interest expires.
Use a loan to consolidate outstanding debts efficiently. Negotiate with each of your creditors to resolve your debt to them via one large payment. Creditors often accept a lump sum of 70 percent. This can actually help your credit score.
You can get help from debt consolidation firms, but be certain your firm is a reputable one. If you feel like something is simply too good to be true, you may have fallen into a scam. Ask any potential lender very thoroughly researched questions, and if they aren’t answered to your satisfaction, keep looking.
Find out whether you can use a small amount of money from your retirement fund to get a grip on your credit cards that have high interest rates. Only resort to this option if you feel that the money can be repaid. If you do not pay the amount back, you will be charged a penalty and will be required to pay income taxes on the amount.
If borrowing money from a bank is not possible, friends and family might be amenable to helping. Be sure though that you spell out the terms of the agreement and know exactly when the money needs to be paid back. You don’t want to drive your loved one away.
You’ll want to find out the physical location of the debt consolidation company. Some states don’t make a debt consolidation service become licensed before opening up. You should always verify that the company you choose is not located in these states. This information can be found easily.
When you’ve got a list of all the people whom money is owed to, get the details for every debt. You need to know your payment amount, due date and how much is owed. This information is essential to a debt consolidation plan.
Pay attention to the fine print on any debt consolidation program. You don’t know about the hidden fees that you may be responsible for. This loan is supposed to cut your debts, not make them bigger; know what you’re getting involved with.
If something sounds like a scam, it probably is, especially when it comes to loans. You aren’t going to get offered something for nothing. If an exciting deal is offered without any expense to you, then you are being duped.
Consolidating and paying off debt takes real dedication and patience. Though getting into debt can happen quickly, getting out of it is slower. You can find financial freedom when you get a decent consolidation loan and pay your debts off.
With the proper information and expectations, debt consolidation can be beneficial. While making a phone call is the starting point, you also need to know the basics and understand what you might be up against. Use the information from above to help you get started in managing your debt.